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2H 2020 Surge Drives RIA Deals to New Record: DeVoe

By Alex Padalka January 22, 2021

Despite a slowdown accompanying the arrival of Covid-19 in early 2020, mergers and acquisitions activity for the year has set yet another record, according to a recent report.

A total of 159 deals took place last year, marking the seventh consecutive year of record activity, DeVoe says in a recent report. It was also 20% more than in 2019, and about four times the number of transactions in 2014, according to DeVoe, a consulting firm and investment bank that focuses on the wealth management space.

What isn’t obvious from such comparisons, however, is the momentum picked up in the last half of the year, according to the report. The third quarter saw 44 deals — the first time the industry crossed 40 deals in a single quarter — but the fourth quarter resulted in 48 transactions, DeVoe says.

Professionally managed firms with more than $1 billion in client assets have been the driving force behind a surge of deals that started in June and is likely to continue into early 2021, according to the report.

And the dominant force in the M&A arena is now what DeVoe calls the META (Most Effective Tactics Available) firms.

DeVoe defines META firms as those with more than $10 billion in client assets, massive scale and high profits — many backed by private equity, run by sophisticated management and committed to staying ahead. Edelman Financial Engines, Wealth Enhancement Group, Mercer Advisors, Focus Financial Partners, Hightower, Captrust and Creative Planning are some examples of META firms, DeVoe says.

Hightower, Creative Planning and Canada’s CI Financial tied for first place among the top acquirers in 2020, with eight deals each, followed by Mercer Advisors, with seven, and Buckingham Wealth Partners, EP Wealth, Captrust and Wealth Enhancement Group, with five deals each, according to the report.

The deals had $1.02 billion in average client assets in 2020, almost 40% higher than in 2019, although that’s slightly lower than the $1.06 billion average reached in 2016, according to the report. But 46 RIAs with $1 billion to $5 billion traded hands in 2020, compared to 25 in 2019, while the number of smaller deals remained flat, DeVoe says.

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Tags:  Finding and winning new clients , Client retention , Staffing and recruiting , Focus Financial Partners , Edelman Financial Engines , Wealth Enhancement Group

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